Published: November 13, 2006 11:19 pm            

House OKs food tax cut

CHARLESTON, W.Va. — Democrats smothered a last-ditch Republican effort Monday night in the House of Delegates to wipe out West Virginia’s grocery tax entirely, then returned a revised bill to the Senate with a compromise in taxing candy and soft drinks.

Delegates also stuck to Gov. Joe Manchin’s bid to lower the corporate net income tax from 9 to 8.75 percent, once again clobbering the GOP in its bid to telescope it down to 6 percent so West Virginia could compete with its neighbors.

Under the altered food tax bill, any item purchased from a vending machine is hit at a restored rate of 6 percent, as well as all soft drinks, regardless of where they’re sold.

Candy, however, falls in line with routine grocery items at the checkout counters if sold in stores. Originally the bill would have pushed candy in line with the 6 percent sales tax.

“I don’t know if they’re upset, but they’re aware of it,” House Majority Leader Rick Staton, D-Wyoming, said after the vote, when asked how the soft drink industry is taking the revised bill.

Industry lobbyists fought for a lower tax on soft drinks when the food tax arose twice this week in House Finance Committee meetings.

Under one estimate provided last week, jacking the pop tax back up to the normal 6 percent sales rate would put some $3.7 million into state coffers, slightly offsetting the projected $25 million loss anticipated when another penny is stricken from the food tax.

Delegates approved Manchin’s go-easy plan to erase a penny in 2007 and another the following year, for an eventual 3 percent food tax. Each one cent drop denies the state a projected $25 million.

Even so, Delegate Mitch Carmichael, R-Jackson, wanted an outright elimination of the food tax, disagreeing that the state cannot afford it, and citing Manchin’s boast of a $400 million surplus.

Democrats asked him to say just where cuts could be made to make up the slack, but Carmichael acknowledged he had no specific areas.

Instead, he quoted the Manchin administration in saying government must be run more efficiently to cover the two-year, 2 percent drop, adding, “We’ll just have to run it even more efficiently.”

His amendment failed on a 31-62, largely party line vote, with Delegate Tom Louisos, D-Fayette, voting with the GOP.

“This is not a political move,” insisted Delegate Mike Hall, R-Putnam, in a failed shot at taking the corporate net income tax down to 6 percent.

“This is a good policy decision.”

Before the amendment failed 33-60, Delegate Keli Sobonya, R-Cabell, told Finance Chairman Harold Michael, D-Hardy, that racetrack owners pay a $6 million slot machine fee in Pennsylvania, and nothing in West Virginia.

“Don’t you agree they’re getting by pretty well in West Virginia?” she asked.

Michael had insisted the state cannot afford a lower corporate net income tax.

The chairman agreed the franchise tax is “one of the worst” taxes collected in West Virginia, but fought another Hall amendment that would ultimately phase it out.

Michael said it would be unfair to tie future legislatures to such a commitment, without knowing how the economy will be.

Before passing a bill providing certain low-income seniors and disabled homeowners with a tax credit, the House, again on party lines, refused an amendment by Delegate Walter Duke, R-Berkeley, to broaden the scope so more are eligible.

But Michael said this would impose a tax shift on the young marrieds and working mothers to make up the slack.

“There are people over 65 who don’t need a tax cut, and don’t want it,” he said.

Tax measures now must return to the Senate in today’s session, the sixth day in a row lawmakers have been in town to work on the first step in Manchin’s tax reform package.



Mannix Porterfield writes for The Register-Herald in Beckley, W.Va.

        

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